Capitalism Fixes Everything

My daughter discovered her artistic talent in middle school.

She used the Microsoft Paint program to create some really cool, sophisticated drawings.

If you’ve ever used Paint, you know how hard it is to do something as simple as draw a straight line. She worked at it very hard and basically mastered it. And if I hadn’t signed off Facebook two years ago, I’d share an example with you…

When it came time for high school, she applied to the Baltimore School for the Arts. It’s a very competitive school — you have to audition. Her portfolio looked great, and I really thought the fact that she worked so well with a digital medium would be to her advantage. It wasn’t. She didn’t get accepted. And I got weepy when I broke the bad news. There is nothing worse than seeing your firstborn get such a big disappointment.

But things often turn out for the best.

She ended up attending the Baltimore Polytechnic Institute on the engineering track (this is pretty much Baltimore’s best public high school). As a senior she was taking AP Calculus 3. Sheesh…

In a little over a month, my baby girl will be off to University of Maryland Baltimore County (UMBC). And she’s already declared a major: Bioinformatics.

If you’re like me, you said, “WHAT????”

Wikipedia says Bioinformatics is “an interdisciplinary field that develops methods and software tools for understanding biological data. As an interdisciplinary field of science, bioinformatics combines biology, computer science, mathematics and statistics to analyze and interpret biological data.”

Pretty cool stuff. It will definitely incorporate her math and artistic skills. And the average entry-level salary is $95K. My girl.

Now, she didn’t pick this major solely because of that salary. But you better believe it was a factor. Because my daughter “gets it.” She appreciates the necessity to do something you love for a career. And she also understands what financial well-being will mean for her life.

And I’ll tell you, for a while there, after the financial crisis, I was very concerned about what the job market would look like when she was entering it. As a family, we talked a lot about how the U.S. economy has changed from what it was when I entered the job market as a 30-year-old, after a couple years as a ski bum and several years as a rock star wannabe. Maybe I was a lunatic, but I never doubted that I would be able to find my way.

I don’t worry about economic opportunity so much anymore. The U.S. economy has evolved from where it was 10 years ago, and I think “these kids today” have some pretty good prospects.

It’s (Always) the Economy

Last week, I came across a great article from Bloomberg. Assistant professor of finance at Stony Brook University, Noah Smith, took on immigration to the U.S. from Mexico.

He writes:

The Mexican-born population in the U.S. — including both those who came legally and those who came illegally — peaked in 2007 at about 12.75 million, and has since fallen by about 700,000… The number of unauthorized Mexican immigrants has fallen even more, by 1.1 million. In other words, during the past decade, the U.S. has seen a large number of unauthorized Mexicans return home, and a modest number of Mexicans come in through legal channels, leading to a net decline.

He even provided a nifty chart:

I’m sure a lot of Americans won’t believe this. After all, we have an immigration crisis, right?

My point here is not to argue whether Mexican immigration has already peaked. Numbers are numbers, and there’s no point in saying they don’t mean what they mean.

I’m also not going to argue about the makeup of illegal immigrants. Yes, it is true that more are coming from Honduras, El Salvador (where that MS-13 gang is from), and Guatemala.

I want to share the author’s point about why Mexican immigration numbers are falling. He writes:

Mexico’s economy has grown robustly — the country’s per capita gross domestic product, valued at purchasing power parity, is now about $19,500, higher than China’s. Mexico’s fertility rate has also fallen to 2.24 children per woman, just slightly more than the replacement rate of 2.1 — that means people need to stay home to take care of aging parents and take over family businesses, instead of going north to work.

People have always come to the U.S. seeking more opportunity, a better life. And America has had more opportunity, that better life, because of three things: rule of law, free trade, and capitalism.

Capitalism Rocks

Around the globe, fewer people than ever live in poverty. Infant mortality rates are lower than ever. Life spans are longer than ever. Literacy rates are higher than ever.

Simply put, the world is a better place, and this is due to capitalism and free trade.

Now, some will surely say that the U.S. has lost a step as the rest of the world has taken a step forward. In other words, they took our jobs.

And there is some truth to this. There’s no doubt that having some cars and car parts made in Mexico by Mexicans mean they aren’t made here by Americans. I am completely fine with this.

The average pay for a U.S. autoworker is about $16 an hour. That works out to about $30K a year. The median income in the U.S. is now $56K a year. Bottom line: Work on an auto assembly line is kind of a crappy job. And that’s exactly how capitalism works.

Capitalism means change. It means evolution. It means out with the old and in with the new. Like, as more automation comes into an auto plant, it necessarily means that human labor is devalued. I get why that’s hard for people to accept. Nobody wants to be devalued and replaced by a machine.

Instead of lamenting that building cars can no longer support a middle class, why not recognize that there are better jobs building and maintaining those robots?

Why lament that coal jobs are disappearing? Why not tell people the truth: that capitalism has discovered better and cheaper ways to generate electricity?

Yeah, it’s totally insensitive. Not politically correct in the least. “Don’t send food, send moving vans. You live in a desert, move where the food is.”

Right now, there are between 5 and 6 million job openings in the U.S. That’s enough to push the unemployment rate close to zero. There are so many job openings that people are coming off the “dropped out of job market” list and re-entering the workforce. That’s why the unemployment rate went up, even though layoffs went down. (This is a big reason I think there are still legs to this bull market.)

Social mobility in this country is at an all-time low. Americans don’t move where the jobs are as much as we used to. People don’t seek out training. My daughter has already figured out that if she wants it, she has to go get it. How hard can it be?

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